Samsung Electronics Posts Flat Second-Quarter Net Profit

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SEOUL—

Samsung Electronics

Co. reported flat second-quarter internet revenue, as a giant drop in mobile-phone revenue dragged down outcomes that had been buoyed by its energy in reminiscence chips.

The world’s largest handset maker ships considered one of each 5 smartphones globally. But customers are holding on to their units longer than earlier than, and balking at value tags for brand spanking new high-end telephones at $1,000 or extra.

For the quarter ended June 30, Samsung mentioned its cell division income, which incorporates its telecom network-equipment enterprise, declined 20% to 24 trillion South Korean received ($21 billion), from 30.01 trillion received a yr earlier. The unit’s working revenue fell to 2.67 trillion received from the year-earlier whole of four.06 trillion received.

Samsung, in its earnings launch, mentioned it will attempt to rejuvenate gross sales by shifting up the discharge of its flagship Galaxy Note 9 telephone, because the large-screen handset is debuting at a New York occasion on Aug. 9, weeks sooner than the earlier yr’s mannequin. The firm additionally signaled it will get extra aggressive on pricing.

The Suwon, South Korea-based firm mentioned total internet revenue was 11.04 trillion received, versus 11.05 trillion received a yr earlier. Revenue fell to 58.5 trillion received from 61 trillion.

Analysts polled by S&P Global Market Intelligence had anticipated the corporate to put up internet revenue of 11.1 trillion received and income of 58.eight trillion received for the quarter.

The agency’s total outcomes had been sufficient to halt what had been 4 straight quarters of record-breaking earnings. The efficiency was largely fueled by sturdy demand for Samsung-made reminiscence chips, which go in rivals’ smartphones, self-driving automobiles and information servers. Last yr, Samsung surpassed

Intel
Corp.

because the world’s largest chip maker by income.

For the present quarter, Samsung’s dominance as a memory-chip provider helped cushion the blow from its smartphone struggles. Semiconductors accounted for 78% of the agency’s working earnings, rising to 11.61 trillion received, the division’s best-ever outcomes.

With smartphones, weaker gross sales of Samsung’s high-end units, notably of its newest flagship machine, the Galaxy S9, shocked cell executives, The Wall Street Journal reported earlier this month. Sales of the Galaxy S9, which hit cabinets in March, may very well be 20% or extra decrease than that of the earlier yr’s mannequin, analysts say.

The souring market has prompted a larger sense of inner urgency at Samsung, spurring executives to pursue plans to introduce a foldable-screen phone by early next year. Such a tool would create a completely new product class and boast a display roughly the scale of a pill, which will be folded right into a shopper’s pocket.

Samsung’s handset division is especially threatened by a mobile-sales slowdown as a result of it predominantly makes cash from promoting new units to customers. Unlike rival

Apple
Inc.,

Samsung has no important enterprise promoting companies, resembling an app retailer or streaming music, which may usher in revenues from present telephone customers holding off on upgrades.

The outlook for the soon-to-be-released Galaxy Note 9 isn’t sturdy, analysts say. In a latest analysis notice, Susquehanna analyst Mehdi Hosseini anticipated shipments of the large-screen Galaxy Note 9 to succeed in simply 5 million units this yr, a steep decline from the 12 million Galaxy Note eight items offered final yr.

Samsung Electronics shares, which underwent a 50-to-1 inventory break up in May, are down about 9% this yr, as buyers marvel how a lot endurance the latest memory-chip success will final.

Write to Timothy W. Martin at [email protected]

Appeared within the July 31, 2018, print version as ‘Weakness In Mobile Hits Profit At Samsung.’

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